See, even the president has to budget. Earlier this week, President Obama presented a $3.7 trillion budget blueprint with his plan to cut our gigantor national debt—at the same time as he tries to maintain vital government programs. His proposal still has to pass Congress, and the Republicans are busy coming up with their own plan in the meantime.
Both are mostly political statements at this stage, since either plan will require a lot of compromise before it passes. If Obama's plan did pass as is, the deficit would decrease to $1.1 trillion next year. This is a big deal because we all pay for the deficit--heavily--through our taxes. According to the president’s estimates for the proposed budget, the deficit would quickly fall soon after the first year, landing at about $600 billion per year through 2018.
So, here’s a summary of the major changes in President Obama's proposal and what it could mean for you:
- Education -- Cut: Year-round Pell Grants, which provided college aid to 8.9 million students in 2010, and other student aid funding. Increase: Education by 11% overall, even though, as The Washington Post says, "new federal spending would not come close to offsetting education cuts expected at state and local levels" even if the president wins approval for all his proposals (which is doubtful).
- Transportation -- Cut: Large construction grants for airports. Increase: High-speed and intercity rail services, as laid out in a new transportation bill.
- Environment -- Cut: Funding for the Environmental Protection Agency (took a big hit: 13% cut from 2010 budget).
- Community programs -- Cut: Community development programs that fund projects like housing, sewers and streets, and economic development.
- Defense -- Cut: Defense spending in total. Increase: Spending in cybersecurity.
- Big Companies -- Cut: Subsidies for oil and gas companies (he wants to end them). Cut: President Obama wants to create new taxes on hedge fund managers and a $30 billion fee for financial institutions to help repay taxpayers for the big TARP bailout. Increase: Corporate research and development.
- Technology -- Increase: A new network that’s supposed to bring high-speed internet to 98% of Americans.
- Women -- Increase: Child care funding at the Department of Health and Human Services, HIV care, teen pregnancy prevention, child support enforcement, help for victims of domestic violence.
Obama also proposes to condense many duplicative or inefficient programs in education, transportation, and other sectors.
How this could impact you…
- If you receive Pell Grants to help pay for education expenses: No more year-round grants, which used to let students in accelerated programs receive two Pell Grants in one year. (Normal Pell Grants will still exist.)
- If you’re a professional or grad student, you may lose that interest-free period on your Stafford student loans when you’re in school and the grace period afterward. Undergrad Stafford loans will still be subsidized, but the debt burden on grad students would go up.
- Plane tickets may get slightly more expensive—the cap on the “passenger facility charge” that we pay on each flight segment may rise from the current $4.50 to $7 because the government wouldn’t be subsidizing airport construction as much.
- If you’re in a lower income bracket and live in a wintery Northern state, you may feel the chill from the cuts on heating assistance.
- Middle income families will be protected from tax increases, while high income families (household incomes over $250,000) will feel income and estate tax increases.
- You may notice infrastructure and community projects slow down (fewer housing projects, sewers, etc.).
- That said, you may see high-speed and intercity trains in the future, which would be pretty incredible.
- More Americans may gain access to high-speed internet.
Commentators speculate on whether the president’s middle-of-the-road stance and avoidance of some big issues like tax cuts and choosing other programs to get the axe is a sign that he’s pandering for reelection. Others view these measures as setting a groundwork for the real discussions.
Regardless, setting national budget priorities shows where an administration places the most emphasis--the impression we get is of a president struggling to maintain programs like Social Security and education even while reducing the deficit by hesitantly cutting into spending like defense and Medicare. For more insight, check out The Washington Post's interactive showing how budget spending priorities have changed over various administrations since Reagan.
The next step in the budget-creation process is for Congress to duke it out and come up with a final version of the Budget Resolution by April. Nothing's set in stone yet, so don't be shy to share your opinion with your representatives: Email your House Representatives and Senators.
Suddenly, deciding how to split our money between entertainment and dining out seems a whole lot simpler.